Mirae to replace Samsung as Korea's top ETF provider

Seoul-based Mirae Asset will become Korea’s biggest issuer of exchange-traded funds, and the fourth biggest in Asia-Pacific ex-Japan, following its purchase of 85% of Canada’s BetaPro Management for C$127.5 million ($131.5 million).

BetaPro and its subsidiary AlphaPro Management manage the Horizons series of ETFs, the biggest ETF range in Canada, with more than 70 ETFs listed on the Toronto Stock Exchange and C$3 billion ($3.1 billion) in assets under management.

Mirae Asset’s Tiger ETF, launched in Korea and Hong Kong in January, had assets of around $1.1 billion as of June 30, and its total ETF AUM will rise to $4.2 billion following the acquisition. That will see the firm overtake Samsung Asset Management – which had $3.8 billion in ETF assets as of May 31, according to BlackRock – as the biggest ETF provider in Korea.

It should be noted, however, that Mirae Asset's business model is very different from Samsung AM's. The latter is significantly more domestically focused in terms of sourcing and allocating its investments.

And the deal will add yet more product and geographical diversity to Mirae’s offering. BetaPro’s range includes leveraged and inverse commodity ETFs, while AlphaPro offers the largest suite of actively managed ETFs in the world.

Mirae Asset and the minority shareholders in BetaPro (the current management) will also own stakes of 80% in AlphaPro and 40% in BetaShares Holdings, an ETF company based in Australia with $160 million under management across four funds.

In particular, Australia’s ETF market is believed to be on an aggressive growth path, says Mirae, which argues that the country’s rich natural resources and economic growth potential can help drive development of its ETF market.

Mirae Asset is planning to further increase its overseas investment over the next several years, based on a combination of robust growth in the domestic and overseas markets, says Hyeon-Joo Park, the firm’s chairman and founder.

Adam Felesky, chief executive of BetaPro, says: “When combining Mirae Asset’s accumulated expertise in emerging-markets investing with BetaPro’s differentiated ETF products, focusing considerably on developed Canadian and Australian markets, a far greater level of synergy can be achieved.”

So will there be any layoffs or changes in management at BetaPro after the acquisition? “Horizons ETF management, including Adam Felesky, will remain at the firm,” says Taeyong Lee, executive vice-president at Mirae Asset Maps Global Investment. “I will work closely with Adam to develop a global ETF strategy.

“We will look for areas where synergy can be achieved and maximised," he adds. "As Horizons ETF in Canada and Mirae Asset Tiger ETF in Asia bring together expertise in innovations and global capabilities, we now have the potential to become a global ETF player."

Mirae is one of the largest investors in emerging-market equities and has a presence in Hong Kong, China, Korea, India, Vietnam, Taiwan, Brazil, the UK and US. It manages over $53 billion in assets globally (as of June 30).

ETF assets globally are expected to increase 20–30% annually over the next few years, according to BlackRock. Industry estimates expect global ETF AUM to reach $2 trillion by early next year.